Alcohol Beverage Space Analyzed
Nuvama Institutional Equities is confident about the alcohol and beverages market. They’ve picked United Spirits and Allied Blenders & Distillers as their top investments. They think a busy wedding season later in the year will boost sales of drinks, as weddings and big parties mean people buy a lot more.
Key Points
- Strong weddings drive higher drink sales and purchases.
- Raw material costs are expected to stay stable for spirits.
- Barley prices could rise, hurting beer companies’ profits.
- United Spirits and Allied Blenders & Distillers are top picks.
- Premium drinks are growing quickly, boosting sales for key companies.
- Weather problems are slowing down the overall beer market.
Why does Nuvama like United Spirits and Allied Blenders & Distillers? These companies are selling a lot of expensive drinks. United Spirits saw its sales of premium drinks grow by 12.4% compared to last year, and Allied Blenders & Distillers saw a 17% rise in premium beer sales, even with bad weather.
United Spirits is doing better than Pernod India in the premium drink market. They’re growing faster and taking more customers. Allied Blenders & Distillers and Radico Khaitan also have strong growth in their premium drink sales.
These companies are making good money too! United Spirits has the highest gross margin (47.1%) in five years. Allied Blenders & Distillers has an all-time high, and Radico Khaitan is close behind. Their profits are also very good.
Looking at the past three years, United Spirits has improved its profit margins by a lot (768 points). Radico Khaitan has also seen improvements (209 points). United Spirits has grown by 27% in revenue and 8% in volume. United Breweries, however, has seen a slight decrease in sales.
The beer market is struggling because of heavy rains and floods in some states. But United Breweries is still growing its premium beer range, which is helping them overcome the problem.
“Strategic investments in premium brands combined with efficient operations will fuel sustained growth in this sector.”
